Saturday, May 18, 2024
 
 

Oil Falls As Geopolitical Tensions Ease

- Advertisement -

Oil prices have dropped as Libya’s output increased, Syrian President Bashar al-Assad said he will provide international inspectors access to chemical weapons facilities and Iran’s new President Hassan Rowhani appeared to strike a conciliatory note with the West.

Fadel Gheit, a senior energy analyst at Oppenheimer in New York, told New Europe that the reason for the price fell was “easing of global tension, partial restoration of Libya’s oil export and increased oil export from Saudi Arabia to slow down rising oil prices. Saudi Arabia does not want oil prices to derail global economic recovery because it hurts them in the long term”.

The Saudis also increased oil production in order for Riyadh to stabilise the market when Libya production was halted a few weeks ago as oil fields and ports were shut amid protests. However, Libyan oil production will rise because of the restart of al-Sharara and el-Fil fields.

Unrest suppressed the Libya’s oil potential. “If Libya ends up getting back to 1.3 million barrels per day, I think you will see oil prices going well below 100 per barrel in very short period of time,” Gheit said. “If there is no physical disruption or people shooting at facilities or terminals, then within two-three weeks the production could double or triple from the current level because there is nothing physically damaged. Basically, they [Libyans] were interfering with the loading of the ships because tribes are fighting over the whole get-the-right-of-the-oil revenue,” the Oppenheimer analyst added.

On 20 September, New York’s main contract, West Texas Intermediate (WTI) for October delivery, was at $106.06 a barrel in morning trade. The European benchmark, Brent North Sea crude for delivery in November, was at $108.61.

Dwindling geopolitical concerns of a US-led military strike on Syria also helped to dampen prices. “Any moderation or cooling off in the Middle East will tend to bring oil prices down,” Gheit said.

Assad said in an interview with Fox News that meeting the disclosure and inspection conditions under the Chemical Weapons Convention, the international accord banning such arms, is “no problem, we can do it tomorrow”.

Syria borders Iraq and is near Iran, countries that are major Organization of Petroleum Exporting Countries (OPEC) producers.

Meanwhile, Rowhani said in an interview with NBC that Iran was not seeking war but rather peace in the region when specifically asked about Israel. He added that he would never seek to develop a nuclear weapon. He also said he has authority to negotiate a deal with Washington.

Gheit pointed out that if the West ends up lifting the economic sanctions from Iran, Tehran will be able to sell oil in the open market at much higher rate. “Eventually what Iran is desperately in need of is really to prop up its economy. Because the Mullahs in Iran know that they are on shaky ground because at the end of the day you cannot keep people angry, hungry and poor for too long,” Gheit said. “They want to beef up their economy and that can only happen with total lifting of the sanctions with the renouncement of their nuclear goal or ambitions but most importantly if foreign capital gets back to Iran.”

follow on twitter @energyinsider

- Advertisement -

Subscribe to our newsletter

Co-founder / Director of Energy & Climate Policy and Security at NE Global Media

Latest

Tackling new threats to critical energy infrastructure

The explosions that targeted the Nord Stream pipelines from...

Georgia’s “Foreign Representatives Law” moves forward amid protests

On May 14, Georgia’s parliament approved (84/150) a hotly...

North Macedonia: Sliding back towards the political dark side?

As most analysts predicted after the strong showing of...

A Green 5+1, regional water issues in Central Asia and previewing next year’s Astana International Forum

Kazakhstan’s Astana International Forum (AIF) has been postponed to 2025, as Astana...

Don't miss

Tackling new threats to critical energy infrastructure

The explosions that targeted the Nord Stream pipelines from...

Georgia’s “Foreign Representatives Law” moves forward amid protests

On May 14, Georgia’s parliament approved (84/150) a hotly...

North Macedonia: Sliding back towards the political dark side?

As most analysts predicted after the strong showing of...

A Green 5+1, regional water issues in Central Asia and previewing next year’s Astana International Forum

Kazakhstan’s Astana International Forum (AIF) has been postponed to 2025, as Astana...

Navigating the climate challenges for COP29

The impacts of climate change have become more evident...

Tackling new threats to critical energy infrastructure

The explosions that targeted the Nord Stream pipelines from Russia to Germany in September 2022 and the suspected sabotage of Baltic-connector pipeline, which supplies...

Navigating the climate challenges for COP29

The impacts of climate change have become more evident as greenhouse gas emissions (GHG) from human activities cause increased heat, drought, floods etc. Changes...

Uzbekistan to mobilize investment in environmental protection, sustainable development

NE Global sat down for an interview, in the Uzbek capital, during the 3rd Tashkent International Investment Forum (TIIF) with Aziz Abdukhakimov, Uzbekistan's Minister of Ecology,...

U.S.-Ukraine Partnership Forum focuses on engaging the private sector in Ukraine’s Recovery

On April 17, in partnership with the U.S. Department of State, the U.S. Department of Commerce, and USAID, the U.S. Chamber of Commerce hosted...

COP 29: Azerbaijan takes the spotlight

The next global climate conference, COP 29, will occur in November in Baku, Azerbaijan. The gathering is essential to continue discussing and developing strategies...

EU, U.S., Uzbekistan and other partners strengthen critical raw materials cooperation

The European Union, the United States, and other Minerals Security Partnership (MSP) partners, joined by Kazakhstan, Namibia, Ukraine, and Uzbekistan, officially launched the Minerals...

The influence of Russia’s nuclear industry steadily expanding in Turkey

Turkey's decision last month that Russian State Atomic Energy Corporation Rosatom will build the country’s second nuclear power plant, most likely at a site...

Pro-nuclear leaders push atomic energy to cut CO2 emissions, boost security of supply

A global push to expand nuclear power continued recently as world leaders from more than 30 countries and the European Union met at the...